Energy Storage: California's New Green Tech Battleground

California’s goal to increase the use of energy storage to complement solar energy generation will open up a new battleground between utilities and renewable energy proponents.

That tension is already present even though the state is just gearing up to be what its policy makers hope will be a testing ground and booming market for innovative storage technologies.

At a panel discussion hosted by the California Public Utilities Commission on Thursday, Lyndon Rive, CEO of SolarCity, talked about how long it took a local utility to approve the grid connection of battery systems his company had installed.

“It takes about eight months to connect. There is no reason for it,” Rive said. “You can’t help but think that it’s slow because there is incentive to keep the game from changing.”

“The average wait is eight months? That’s crazy,” said Elon Musk, chairman of SolarCity and CEO of Tesla Motors, which is selling lithium-ion battery packs to SolarCity.

The commission invited the two men, who are cousins, to talk about how regulations can help or hamper innovation. California has long embraced policies that aim to nudge people to conserve energy and minimize the impact of climate change.

While that progressive politics should help California reduce its greenhouse gas emissions, the policies have taken time and pains to evolve. Some of their long-term implications, good or bad, aren’t all that clear.

The latest example comes from the emerging energy storage market. The state is just starting to carry out a program that requires utilities to use energy storage to help them manage the increasing amount of solar and wind energy flowing into the grid. The three big investor-owned utilities are to collectively buy or own 1,325 megawatts of storage by 2020. Utilities could buy services from owners of the storage equipment installed at homes and businesses. They also could choose from a variety of energy storage technologies, not just batteries.

The grid runs smoothly when it maintains a balance of supply and demand. Utilities will use the batteries to inject power into the grid to help keep that balance in place when there is an intermittent flow of solar and wind electricity. They could accomplish this task by cranking up natural gas power plants, too, but policy makers want to gradually move California away from relying on fossil fuels.

California utilities have to get 33% of their electricity from renewable sources by 2020. As a result, gigawatts of solar power plants have been completed or are under construction or development.

On top of that, the state’s incentive program to encourage rooftop solar for homes and businesses has led to nearly 2 gigawatts of installations. These installations don’t count toward that 33% mandate.

The growth of the rooftop solar market is attracting more companies that want to sell or lease batteries. They are targeting customers who want to bottle solar electricity for use when they are home at night, or to use it as a backup power during a blackout. They also are pitching to businesses the idea of using batteries to reduce an expensive charge that businesses pay to utilities.

Utilities have resisted regulations for promoting rooftop solar generation, which not only reduces their revenues but also forces them to figure out new ways to make money.

Without energy storage, people depend on their utilities for electricity when the solar panels aren’t producing power. With it, much of that reliance could very well disappear, though whether each home and business will completely cut its ties with the grid is unclear.

Mindful of the conflicts ahead between companies like SolarCity and utilities, the commission’s president, Michael Peevey, advised Rive and Musk to use “a little foreplay” to romance their rivals and get what they want, a comment that drew big laughs from the audience.

Beyond fights between utilities and energy storage companies, though, lies big challenges of creating a market for new – and often unproven – technologies.

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Battery storage may be practical for rooftop solar for individuals, but it would take enormous development to make it usable at the scale of the grid. The EU recently completed a study of energy storage and concluded that pumped hydro and compressed air were the only two technologies ready for market.

Pumped hydro is an old and proven technology and much cheaper. Compressed air isn’t new but hardly deployed. California isn’t requiring only the use of batteries, though part of the state’s mission is to promote new technology deployment so that it could achieve scale and drive down prices.

I’ve written about Beacon Power’s projects in Pennsylvania, but flywheel in general doesn’t seem to be gaining popularity among project developers. Lithium ion batteries are much more popular, but the market is still early.

Here is my last story on flywheel: http://www.forbes.com/sites/uciliawang/2013/06/18/beacon-power-to-build-a-flywheel-plant-to-keep-the-grid-in-good-health/

Flywheel energy storage, in my humble opinion, isn’t really the kind of storage we need. It certainly has some benefit in its ability to smooth fluctuations, but the fact that you have to constantly put energy into the flywheel to keep it spinning, and then its kinetic energy will absorb shocks it certainly doesn’t have the ability to supply energy for the periods of time required. Batteries can do this, but man they are not cheap. I think eventually pressurized liquid or air will hold real promise.

Storage as a PV supplement faces not only long-term permitting and other utility politics, but also a significant end-user imposition of new cabling either inside or outside or both, depending on how flexible the battery block is designed to interact throughout the home. I like to point out that “it’s all about the load” in some very real ways, and the manufacturers of major residential loads (i.e. refrig, Washer/Dryer, AC units) today have a huge opportunity to place themselves at the forefront of this storage trend by introducing smart appliances with a low-cost (possibly sub US$10) Li-Ion ready dock tied to existing smart appliance connectivity or simple dedicated connection to allow these loads to directly respond to any utility DR program with NO end-user compromise and with predictable 100% temporary load shedding. A Li-Ion capable of 1-2 hour operation for these is heading south of US$50 in factory cost, and there is no new household wiring, no garage server rack style monstrosity, no new sales channel required, just a cool new “Whirlpool”/”Samsung”/etc. refrigerator marketed as battery boosted (and of course emergency operation benefit as well), but more importantly gaining the DR incentives and specific storage incentives already being offered in CA and elsewhere to subsidize downstream battery installation and generate long-term DR monetization opportunities. I wonder if one of these OEMs is already working on this or will soon take the lead here in N.America…I think this would be more immediate value for maybe less factory cost than many current “smart appliance” value propositions.